Starting a Small Dairy Processing

Plant: The Basics

Minnesota Department of Agriculture

Dairy & Meat Inspection Division

625 N Robert St
St. Paul, MN 55155

(651)-201-6300

The information contained in this document is current as of the date of publication. Because laws can change, it
is important to check to see if there have been any changes or updates to applicable laws and regulations.
In accordance with the Americans with Disabilities Act, this information is available in alternative forms of communication upon request by
calling 651-201-6000. TTY users can call the Minnesota Relay Service at 711. The MDA is an equal opportunity employer and provider.
Table of Contents
Section 1: Getting Started with Dairy Processing ...........................................................................1
Getting Started...................................................................................................................................... 1
Section 2: Overview of the Regulatory Requirements .....................................................................2
Definition of a Dairy Plant ..................................................................................................................... 2
Grade A vs Grade B ............................................................................................................................... 3
Grade A ................................................................................................................................................. 3
Grade B.................................................................................................................................................. 4
Rules, Laws & References: .................................................................................................................... 4
Section 3: Licensing, Permitting & Fees .........................................................................................5
Licensing................................................................................................................................................ 5
Licensing the plant/operation:.............................................................................................................. 5
Other types of licenses: ........................................................................................................................ 5
Permitting ............................................................................................................................................. 6
Fees ....................................................................................................................................................... 6
Other Considerations ............................................................................................................................ 7
Section 4: Inspections ...................................................................................................................8
Prior to Processing ................................................................................................................................ 8
After You’ve Started.............................................................................................................................. 8
The Inspection Process ......................................................................................................................... 9
Notice of Inspection.............................................................................................................................. 9
Section 5: The Production Process...............................................................................................12
Transporting Milk ................................................................................................................................ 12
Fluid Milk Products: ............................................................................................................................ 12
All Grade A and Grade B Dairy Products ............................................................................................. 13
Cooling ................................................................................................................................................ 15
Warehousing ....................................................................................................................................... 15
Aged Cheeses ...................................................................................................................................... 16
Section 6: Milk Quality, Sampling and Testing ..............................................................................17
Dairy Inspection Program Sampling .................................................................................................... 17
Raw Milk from the Farm ..................................................................................................................... 17
The information contained in this document is current as of the date of publication. Because laws can change, it
is important to check to see if there have been any changes or updates to applicable laws and regulations.
In accordance with the Americans with Disabilities Act, this information is available in alternative forms of communication upon request by
calling 651-201-6000. TTY users can call the Minnesota Relay Service at 711. The MDA is an equal opportunity employer and provider.
 Enforcement of raw milk farm sampling results ................................................................................. 18
Raw milk at the Plant .......................................................................................................................... 18
Product Samples ................................................................................................................................. 19
Internal Testing and Quality Assurance .............................................................................................. 20
Section 7: PMO Appendix N Testing & Adulterated Milk Enforcement ..........................................21
Appendix N Testing ............................................................................................................................. 21
When you get a positive: .................................................................................................................... 21
Reporting Requirement ...................................................................................................................... 22
Enforcement Actions and Penalties .................................................................................................... 22
Appendix A: Getting Started ........................................................................................................23
Questions to Think About as You Get Started .................................................................................... 23
The Next Steps: After Construction Begins ......................................................................................... 27
Considerations for Planning your Processing Plant ............................................................................ 28
Who can help? .................................................................................................................................... 29
Appendix B: Dairy Inspection Forms ............................................................................................30
Grade A Dairy Farm Inspection Report: FDA Form 2359a .................................................................. 30
Grade B Dairy Farm Inspection Report: .............................................................................................. 31
Manufacturing Grade Dairy Plant Inspection Report: FDA Form 2359c ............................................. 33
Appendix C: Fees and Licensing Requirements for Small or On-farm Dairy Processors ................... 34
Licensing Fees ..................................................................................................................................... 34
Plant and Pasteurizer Inspection Fees ................................................................................................ 35
Farm Inspection Fees .......................................................................................................................... 36
Processor Assessment Fees ................................................................................................................ 37
Procurement Fees ............................................................................................................................... 38
Annual Laboratory Evaluation Officer Fees ........................................................................................ 38
Annual Laboratory Evaluation Officer Fees: ....................................................................................... 38
Appendix D: Commonly Asked Questions....................................................................................40

The information contained in this document is current as of the date of publication. Because laws can change, it
is important to check to see if there have been any changes or updates to applicable laws and regulations.
In accordance with the Americans with Disabilities Act, this information is available in alternative forms of communication upon request by
calling 651-201-6000. TTY users can call the Minnesota Relay Service at 711. The MDA is an equal opportunity employer and provider.
Section 1: Getting Started with Dairy
Processing
This document is intended to be an educational resource that provides a starting basis for
meeting the regulations and laws that apply to dairy processing plants. Included in this
document is a basic overview of things that you should consider and some of the basic
requirements for dairy processing plants in Minnesota. It does not and cannot cover every
possible situation or question so you will need to consult other more detailed resources for
questions on specific parts of your operation. It is also very important to work with the local
inspector or other dairy program personnel as you put together your plans for your dairy plant
so that you can be confident that you’ve completed all the necessary steps.

This document will cover many of the basics of dairy processing, including:

• An overview of the regulatory requirements

• Information on licensing, permitting and fees
• A description of what you can expect for inspections
• A brief overview of dairy product sampling requirements
• Product labeling information
• Information about required antibiotic testing
• A checklist to use as you begin your operation
• Other basic information you can use to help make sure you have considered the
relevant information

Getting Started
It is important to ask many questions as you get started with your dairy plant. Appendix A contains a
list of questions you may find helpful to consider as you begin your business

Starting a Small Dairy Processing Plant: The Basics 1

Section 2: Overview of the Regulatory
Requirements
Dairy products are regulated under two separate and distinct sets of regulations. Grade A dairy
products are regulated by the Pasteurized Milk Ordinance (PMO). Manufacturing Grade (also
called Grade B) are regulated by a separate set of regulations found in the Federal Code of
Regulations (7 CFR 58) and the USDA Guidelines for Milk for Manufacturing Purposes. These
Federal standards are adopted by Minnesota State Statutes to be Minnesota’s standards. All
dairy products also have additional regulatory requirements listed in Minnesota State Statutes,
with Chapter 32D specifically addressing dairy products.

The Minnesota Department of Agriculture (MDA) Dairy and Meat Inspection Division (DMID)
administers and enforces these dairy laws and regulations which are designed to protect the
public. Because all facilities must be approved and permitted by the MDA before dairy
products are processed, manufactured or sold, it is very important to work in consultation with
the MDA DMID staff as you are making your plans.

Definition of a Dairy Plant

According to Minnesota State Statutes (MS 32D.01 Subdivison 6), a “dairy plant” means any
place where a dairy product is manufactured, processed, or handled and includes milk-receiving
stations, creameries, cheese factories, condenseries, milk plants, transfer stations, and
marketing organizations that purchase milk and cream directly from producers for resale and
other establishments, but does not include any place where dairy products are not processed,
but sold at wholesale or retail only.

On-Farm Dairy Processing Plant: An On-Farm Processing Plant is a dairy plant located at the
same location as the farm from which they get the milk used to process dairy products.

Small Dairy Processing Plant: A small dairy processing plant is a dairy plant which is not located
on a farm, processes dairy products, and less than 700,000 lbs of milk a year.

Both on-farm dairy processing plants and small dairy processing plants are required to meet
many of the same rules and regulations as larger dairy plants. Whether it is located on or off
the dairy farm, in most cases, the dairy processing plant must be licensed and inspected by the
MDA.

Starting a Small Dairy Processing Plant: The Basics 2

Grade A vs Grade B
Dairy plants fall under different regulatory requirements according to the products that they
produce. It is important to understand how the products you want to produce are categorized
so that you can ensure you are meeting the regulatory requirements for that type of product.
The following table shows how the dairy products are split into different categories.

Table 1: Grade A vs. Grade B Product Differentiation

Grade A Grade B (Manufacturing Grade)

Fluid Milk and Milk products (For example, whole Cheeses

milk, low-fat milk, or skim milk) Butter
Cream (Heavy, light, whipping) Ice cream
Half and half Ice cream products
Yogurt Some dry products
Cottage cheese Other food products whose primary ingredients
Cultured or acidified milk are dairy or milk.
Sour cream
Some dry milk products
Buttermilk
Eggnog
Other similar type products

If you want to produce a product that does not appear on this list but that is made primarily
from a dairy product, it is best to check with the dairy inspection program to determine
whether or not the dairy regulatory requirements will apply.

Grade A
Grade A dairy facilities and processing plants are held to the strictest standards. Some of these
basic requirements include:

• They must comply with all requirements of the PMO and Minnesota State Statutes.
• Grade A dairy plants are inspected at minimum four times per year and the products
are typically sampled by the dairy inspector on a monthly basis.
• Only milk from Grade A dairy farms may be used in Grade A products.
• The milk used to make Grade A products must be pasteurized at the place of
production. For example, if the plant buys pasteurized milk from another Grade A dairy
facility it must be repasteurized at the plant where the product is being made.

Starting a Small Dairy Processing Plant: The Basics 3

Grade B
Grade B dairy facilities and processing plants must meet specific requirements as well. Some of
these basic requirements include:

• They must comply with the Federal Code of Regulations and Minnesota State Statutes.
• Grade B dairy plants are inspected at minimum 2 times per year and the products are
sampled by the dairy inspector typically on a yearly basis. Farmstead Cheese are
inspected 4 times per year.
• Milk from either Grade A or Grade B farms may be utilized for Grade B dairy products.
• Depending upon the situation, milk may be required to be pasteurized on-site at the
place of the product of the product. However, in some cases, pasteurization is not
required.

Rules, Laws & References:

The following is a list of references to applicable regulations for dairy processing and manufacturing.

• Grade A Pasteurized Milk Ordinance (PMO):

https://www.fda.gov/downloads/Food/GuidanceRegulation/GuidanceDocumentsReg
ulatoryInformation/Milk/UCM513508.pdf
• Minnesota State Statutes, Chapter 32D, Dairy products
• Minnesota State Statutes, Chapter 28A, Licensing of Food Handlers
• Minnesota Rules, Chapter 1525
• 3A Standards for construction of dairy equipment
• USDA Milk for Manufacturing Purposes and its Production and Processing,
Recommended Requirements
• 7 CFR 58 – Grading and Inspection, General Specifications for Approved Plants and
Standards for Grades of Dairy Products
• FDA Good Manufacturing Practices (GMP’s)
• Code of Federal Regulations (CFR) 21 & 7
• Federal Milk Marketing Order
• Milk and Dairy Beef Drug Residue Prevention Manual

Starting a Small Dairy Processing Plant: The Basics 4

Section 3: Licensing, Permitting & Fees
Various licensing, certifications and fees will apply depending on the type of dairy processing
facility. MDA’s DMID grants licenses and certifications unless otherwise noted. A detailed list of
license and fees that may apply is included in the MDA Factsheet: Fees and Licensing for On-
Farm or Small Dairy Processors Fact Sheet (Appendix C).

Licensing
Almost all dairy processing plants will need some sort of license. Licensing is based on your
physical facilities and the type of business activities you conduct in and outside of those
facilities.

Licensing the plant/operation:

• The type of license you need will be based on the type of activities that you do. For
example, if you are primarily a manufacturer, you will need a wholesale
manufacturer/processor license.
• The owner of the plant or operation is required to have only 1 processing license per
physical location (separate addresses).
• If you are conducting mobile activities, such as selling products at a Farmer’s market or
festival, you also may need a mobile food handler’s license.

Other types of licenses:

• Individuals working in the operation may be required to obtain additional licenses or
certifications to perform specific activities such as:
o Bulk Hauler License
o Certifications to conduct drug testing (Appendix N certifications)

A licensing exemption is available to anyone who is producing product made from ingredient
produced only on your farm. For example, unsalted butter can be made solely with milk
produced by your cows on your farm and no other ingredients. If this were your only
products, you may qualify for a licensing exemption; however, you would still need to meet
the regulatory requirements for having a dairy plant.

Please Note; Licensing and Permitting are Different!

Even if you don’t need a license, you will still need to be inspected and are required to meet
the regulatory requirements for processing safe food.

Starting a Small Dairy Processing Plant: The Basics 5

Permitting
It is important to remember that permits are separate from licenses, and dairy plants must
have both a license and a permit. There is no fee for the initial permit but there is an inspection
fee that accompanies the permit.

All dairy plants are required to have a dairy plant permit. Dairy permits are represented by a
certificate and an assigned permit number.

Permit numbers:

o Are assigned to each plant by dairy program staff;

o Start with a State specific prefix. Each State has an assigned prefix. The
Minnesota prefix is “27”;
o Are formatted with a “27-XXX”, with the “XXX” representing a 3 number
sequence that is unique to that plant; and
o Must be put on all dairy products produced at the facility to provide a means to
trace the product back to the production facility; Permits are:
o Granted by the dairy inspector when they conduct the final inspection and
approval for operations to begin.
o Not able to be transferred to other people or locations; however, a permit
number may be transferable if the previous owner does not have any ties to the
permit number and “gives it up” upon transfer to a new owner.

Fees
Dairy plants are also required to pay fees. The fees fund the dairy inspection program activities.
For an individual dairy plant, the fees that are required are dependent upon the type of
operation, the products that are produced and where, where and how those products are sold.
Specifically, plants may be subject to the following fees:
• Plant Inspection Fees
• Pasteurizer Inspection Fees
• Fees for approval of equipment plans reviews, plant reviews and inspections or special
approvals (Approval Services Fees)
• Reinspection Fees
• Farm Inspection Fees
• Laboratory Evaluation Fees
• Processor Assessment Fees
• Milk Procurement Fees

Starting a Small Dairy Processing Plant: The Basics 6

Other Considerations
Interstate Shipment
If you will be shipping Grade A products across State lines, then your plant needs to be
surveyed as an Interstate Milk Shipment (IMS) plant. The plant would be required to meet all
Grade A regulatory requirements for shipment of Grade A product into other States. There are
no additional fees associated with IMS certification.

The Grade A Interstate Milk Shipment requirements do not apply to manufacturing grade dairy
products. These products may be shipped across State lines without any additional inspection
requirements.

Purchasing Milk from Other Producers

If you are purchasing milk from other producers, you may need to obtain additional licenses,
permits or certifications, including, but not limited to:

• Participating in the Federal Milk Marketing Order. If you purchase Grade A milk from
other producers, this will likely be required. Contact them directly for more information
on how to participate and what permits or certifications are required.
• Obtaining a Wholesale Produce Dealer’s License and Bond (MDA Fruit, Vegetable and
Grain Unit)
• Maintaining a field representative certification
• Milk tanker inspection and the appropriate permit for transporting milk

Starting a Small Dairy Processing Plant: The Basics 7

Section 4: Inspections
Routine inspections of dairy plants are conducted by the MDA DMID program staff as a tool to
ensure regulatory requirements are met and that food safety issues are addressed. Additional
inspections may be made by the Food and Drug Administration (FDA) and United States
Department of Agriculture (USDA) depending upon the type and distribution of the product
being produced. The inspection process starts prior to operations with plan reviews and site
visits. Once operations begin, routine inspections will be conducted at the plant. Examples of
inspection documents are included in Appendix B.

Prior to Processing
All dairy plants must be approved by an MDA Dairy Inspector before they can begin operating.
Before and during construction the dairy inspector will work closely with the processor, making
visits to the facility when needed. Important points to remember about inspection work and
reviews that take place before the plant is operating:

• Working with the inspector during the start-up phase helps ensure you meet the
regulatory requirements and prevents the need to make larger scale changes
after you’ve finished major construction and equipment installation.
• There is an hourly charge of $45/hour for plan reviews and on-site inspection
work that takes place in order to help get the dairy plant approved (called
“Approval Services”).
• The 1 initial on-site inspection will not be billed to the plant and any
subsequent contact or visits initiated by the inspector are not billed
either.
• Inspections or work initiated by the processor will be billed. A start up
processor should expect to incur some expenses for approval of their
plant, thought these will vary depending upon the operator’s experience,
need for assistance and overall plan for implementation.

After You’ve Started

After start-up, the plant will be routinely inspected by the local dairy inspector. During these
inspections, the inspector will make observations of the production process, review equipment
to ensure it is clean, assess the overall plant environment, review records and perform other
activities to verify that the regulatory requirements are being met.

Starting a Small Dairy Processing Plant: The Basics 8

Inspections are:
• Conducted at least 4 times per year for:
o Grade A plants; and
o Farmstead Cheese plants
• Conducted at least 2 times per year for other manufacturing grade plants
• Unannounced
o In some special cases, like intermittent operators, inspections may be scheduled
to ensure the inspector has an opportunity to observe actual production.
o Anytime the plant is open and operating, an inspection may be conducted.

The Inspection Process

Notice of Inspection
A Notice of Inspection is delivered at the beginning of an inspection. The document states the
reason for inspection and includes a statement that discusses how the data collected during the
inspection is handled. Specifically, the Notice includes the following statements:

“The data provided is not public and will be protected; available only to those whose access is
authorized by law, department employees whose job reasonably requires access or by court
order. When the Department of Agriculture determines no action is to be taken or the
inspection or investigation becomes inactive; data will become public unless otherwise
protected by law. “

This provision requires the MDA to keep the results and documentation associated with an
inspection or investigation private until that action is officially closed. This means that the MDA
cannot release copies of the inspection reports, lab results or any other information from an
inspection or investigation until that action has been concluded or resolved. Once the
investigation or inspection is closed, these documents will become public and if a member of
the public requests copies of these documents, the MDA will have to release the information.

During the Inspection

You can expect that the inspector will do a number of different things during the inspection
process, including, but not limited to the following:

• Hold an entrance meeting at the beginning of the inspection to review their plans for
the inspection;
• Perform a visual inspection of the plant facility, equipment and surroundings;
• Examine equipment and utensils to ensure that they are clean and in good repair;
• Observe the plant while it is in production;

Starting a Small Dairy Processing Plant: The Basics 9

 • Review labels and containers for any chemicals used in the production process or for
cleaning;
• Perform pasteurizer tests on pasteurization equipment at least once every 3 months for
Grade A plants, farmstead cheese and culture plants and once every 6 months at other
plants;
• Review pasteurization charts, cleaning records, recording charts and production records
to ensure legal pasteurization temperatures are being met, antibiotic screening is being
properly completed and documented and other production parameters are in
compliance and adequately documented; and
• Review product labels to ensure they meet the regulatory requirements.
• Hold a closing meeting to go over their findings and any violations found or items that
must be completed by the next inspection.

Documentation of Inspections
Inspections are documented using a standard inspection report form. When an inspector
documents their findings on an inspection form, they will:

• Complete a standardized inspection “form” that will have the specific items they’ve
found in violation marked with a “☒”.
• Complete a written narrative report with written orders. “Orders” include:
o A description of the things they observed to be in violation
o An statement on how to fix the violation; and
o A compliance date (a deadline of when the item needs to be corrected).
• Create a signature document during which the plant owner or representative will be
asked to sign as an indication that they have received the documentation; and
• Provide the plant with a copy of all inspection documentation after the on-site
inspection is concluded.

Violations
When the inspector identifies something that is not in compliance with the regulatory
requirements, he or she will document this finding as a violation. While all violations are
important, some violations are more critical than others.

• Critical violations are violations that have or have a significant potential to directly affect
the safety of product.
• More minor violations may not have as strong of potential to directly affect the safety of
the product but taken with other findings may combine to affect product or the sanitary
condition of the environment.

Starting a Small Dairy Processing Plant: The Basics 10

Since pasteurization is a critical to the production of safe milk, any violations found during
pasteurizer testing need to be corrected immediately to continue processing milk.

• If the violation is serious enough, the inspector may order a recall of products processed
in a determined span of time.
• When other critical violations are found, the inspector may issue a “Notice of Intent to
Suspend” document which provides warning that inspector will be returning for a re-
inspection and the violations will need to be corrected at that time or a suspension of
the plant’s permit will result.
o There is also a fee charged to the plant when there is a reinspection.

Violations that are noted on an inspection need to be corrected as soon as possible. Inspectors
will usually note that violations have been corrected during documentation of subsequent
inspections so correction of violations in a timely manner is also an opportunity to demonstrate
cooperation and a willingness to address food safety issues in your facility. Failure to correct
violations may result in reinspections (including fees), a regulatory hearing, a permit suspension
or other enforcement action.

Starting a Small Dairy Processing Plant: The Basics 11

Section 5: The Production Process
The following is an overview of the requirements at different processing steps for producing
Grade A Dairy products. These requirements come from the PMO. Other dairy products may
have similar requirements, but the actual requirements depend upon the type of product being
manufactured.

Transporting Milk
The following information applies to both Grade A and Grade B dairy facilities:
• The type of vehicle or transportation method you need will depend upon the setup of
your operation.
o An on-farm processer may transport milk through a pipe from the bulk tank to
the plant.
o A small dairy plant may need a small bulk milk pick-up truck and tank to travel to
one or two producers and pick up purchased milk.
• Work with your inspector to determine the best way to meet your transportation needs.
In some cases, additional permits or licenses will be required for milk transportation
vehicles.
• Keeping milk cold and using clean equipment to transport the milk are both very
important food safety concepts to remember for the transportation process.

Fluid Milk Products:

Vitamin Addition
Vitamins A and D must be added to all reduced fat Grade A dairy products because:

• Vitamin A is removed from milk during the removal of fat from low or non-fat milks.
Because Vitamin A is fat soluble and dissolves with fat, removing the fat also removes
the Vitamin A. Whole milk still contains fat, and thus Vitamin A, this Vitamin does not
have to be added to whole milk.
• Vitamin D is naturally present at low levels in milk. However, because it promotes the
absorption of calcium by the intestine, historically regulations required the addition of
this in order to address rickets in children. The need for normal levels of Vitamin D for
other health problems, such as osteoporosis, makes the addition of Vitamin D a
continued requirement.

For products that require the addition of vitamins, annual testing of products to determine that
the appropriate levels are being added is required. This testing is initiated by the processor and
is performed at the cost of the processor.

Starting a Small Dairy Processing Plant: The Basics 12

If you are producing reduced fat Grade A dairy products, consider the following questions as
you formulate a plan for adding these Vitamins:

• From where will you source your vitamins?

• How will the vitamins be added?
• When in the processing procedure will they be added?
• What are the Minimum and Maximum levels required?
• How will you keep records of what you are adding?
• Where will you have your product tested?

Packaging and Capping

The requirements for bottling, packaging and capping (of bottled products) depend upon the
type of product that is being produced. Some general requirements for this part of the process
include:

• All bottling and packaging of Grade A milk and milk products must be done at the plant
where the product was pasteurized. It must be completed in a sanitary manner with
approved mechanical equipment. Capping and/or closure of the containers must be
done in a sanitary manner by approved mechanical capping and/or closing equipment
(in other words, capping bottles by hand is not allowed).
• All packaging materials and containers must be made of food grade materials. In some
cases, single service packaging materials (like plastic milk jugs) must be obtained from a
specific source.
• The cap or closure for bottles must be “tamper proof” in that the cover cannot be
removed without breaking a seal.

All Grade A and Grade B Dairy Products

Pasteurization
In Minnesota, all Grade A dairy products must be made from pasteurized milk. This
requirement comes directly from Minnesota Statute 32D.20 which states:
“No milk or fluid milk products shall be sold, offered or exposed for sale or held in
possession for sale for the purpose of human consumption in fluid form in this state
unless the milk or fluid milk product has been pasteurized and cooled.”

This Statute also addresses milk used for all other dairy products, not just Grade A. The
exception is milk that is used to make aged cheese. In the case of aged cheese made with raw
milk specific requirements must be met. See Aged Cheeses below.

Starting a Small Dairy Processing Plant: The Basics 13

 What is Pasteurization?
Pasteurization is the process of heating every particle of milk to a temperature designed to
kill bacteria that can cause human illness. The milk must be held at that temperature for the
designated period of time to ensure that the bacteria are killed. The following chart lists the
legally allowed pasteurization times and temperatures.

Table 2: Pasteurization Specifications

Type of How this works Minimum temperature Minimum time

Type of Product
pasteurization
Vat Pasteurization Heating one batch at 145 degrees Fahrenheit 30 minutes
For regular milk
a time in an
products
approved tank
High Temperature- A continuous flow 161 degrees Fahrenheit 15 seconds
Short time system
Vat Pasteurization Heating one batch at 155 degrees Fahrenheit 30 minutes
For milk products
a time in an
with added
approved tank
sweeteners or a fat
content > 10 High Temperature- A continuous flow 175 degrees Fahrenheit 15 seconds
percent: Short Time system

Note: There are no time and temperature combinations in between these that comply with the
requirements.

Other Important Facts about Pasteurization

Because pasteurization is a very important public health control, there are a number of
additional requirements for the pasteurization process. Specifically, the following are
important things to consider as you design your process:
• All raw products must be added before pasteurization begins. Once pasteurization has
occurred, the addition of ingredients introduces an additional potential hazard into the
product.
• Cross-connections between raw and pasteurized products are not allowed. These occur
when common piping or valves are used for both raw and pasteurized product or have a
common opening which could allow raw and pasteurized product to intermix. A dairy
equipment specialist can help you determine an acceptable set up for your equipment.
• Equipment used for pasteurization must be approved and tested by the MDA on a
routine basis.
o The following table lists the frequencies of equipment testing:

Starting a Small Dairy Processing Plant: The Basics 14

 Table 3: Pasteurization Equipment Testing Frequency
Type of Testing Frequency
Production/Plant
Grade A Quarterly (4 times/yr)
Farmstead Cheese Quarterly (4 times/yr)
processor
Other Manufacturing Grade Semi-annually (2 times/yr)
Plant
• Various controls on the pasteurization units are sealed by the MDA inspectors so that
temperatures, timing and pressures cannot be changed once they are tested.

Cooling
Proper cooling is also required for all dairy products, including Grade A and Grade B. By
keeping the product cool, the temperature of the product stays in a range that helps limit or
stop the growth of bacteria.
Milk products must be maintained at 45°F or less at all stages during processing (except when
intentionally heated for pasteurization or processing). This includes, but is not limited to the
following processing steps:

• The holding of raw milk or milk products in storage tanks prior to processing;
• Cooling of the milk or milk products as soon after pasteurization as possible;
• Storage of all milk or milk products after they have been processed, bottled or
packaged; and
• Any other step in the process where milk or milk products are being held.

All coolers (or rooms), cooling units or storage tanks used for cooling or storage must have a
properly operating thermometer.

Warehousing
The following information applies to all Grade A and Grade B dairy facilities:
• Storage of finished product, ingredients, packaging materials, containers, single service
items, filters, and chemicals and other items in a sanitary way is important.
o All of these items must be stored in a way that they do not become
contaminated by harmful substances.
o For most products, this means they need to be stored in a clean dry place above
the ground, away from wet walls.
• Rodent and pest control is very important in these areas as well; routine cleaning, good
storage and organization and frequent maintenance of the building and surrounding
areas is important to prevent introduction of these unwanted pests.

Starting a Small Dairy Processing Plant: The Basics 15

Aged Cheeses
Aged cheeses are the only product that is currently acceptable to be made with raw milk. Per
the regulations, raw milk cheeses must be aged for a specific length of time. When properly
done, it reduces the quantity of harmful microorganisms present in raw milk. For all cheeses, at
least one of the following requirements must be met, per Minnesota Statute 32D.22:

• Cheese must be manufactured from milk or milk products which have been properly
pasteurized;
• If the milk hasn’t been pasteurized, the milk used to produce cheese must be subjected
to a heat treatment equivalent to pasteurization during the process of manufacture or
processing; or
• Cheese made with raw milk must be subjected to an aging process whereby it has been
kept for at least 60 days after manufacture at a temperature not lower than 35oF.

Raw milk cheeses must be labeled as such. The label must also contain the true date of
manufacture. If the cheese is repackaged, handled or processed in any way that removes the
date of manufacture, it must be relabeled to show the true date of manufacture or labeled with
a statement that indicates that it is more than 60 days of age.

Starting a Small Dairy Processing Plant: The Basics 16

Section 6: Milk Quality, Sampling and
Testing
Dairy Inspection Program Sampling
Milk and milk products are sampled and tested by the regulatory agency on a regular basis to
ensure the quality, safety, and labeling compliance of the product.

• For Grade A products, the sampling frequencies for different products are described in
the PMO.
• Non-Grade A products are sampled on a more intermittent basis; however, they are
tested for specific pathogens each time a sample is collected.
• Sample results are compared against the regulatory requirements to determine whether
they are in compliance. If specific disease causing bacteria (pathogens) are found in a
sample or the sample isn’t in full compliance with the requirements, a product recall or
other regulatory action may need to be conducted.

Raw Milk from the Farm

Raw milk samples are collected from the farm bulk tank to determine compliance with bacteria
(SPC), somatic cell count (SCC), temperature and antibiotic requirements. It is the plant’s
responsibility to ensure that these samples are collected and submitted to a laboratory. These
samples must be:

•Representative of the entire herd’s milk;

•Collected by a licensed bulk hauler or sampler on a monthly basis;
•Submitted to an approved laboratory for quality testing (SPC, SCC, temperature and
antibiotics); and
Reported to the MDA on a monthly basis.
These sample results must be submitted to the MDA’s dairy inspection program through the
electronic qualities email system. Upon receipt of the results, the MDA will review them to
determine if they meet the regulatory requirements. The following table details the regulatory
requirements for these samples.

Starting a Small Dairy Processing Plant: The Basics 17

Table 4: Regulatory Standards for Raw Milk from Farms

Standards for Raw Milk Grade A Manufacturing Grade (Grade B)

Bacteria (Standard Plate Count) < 100,000 < 500,000

Somatic Cell Count (Sheep & Cow) < 750,000 < 750,000

Somatic Cell Count (Goats) <1,000,000 < 1,000,000

Temperature < 45OF < 45OF

Drug Residue Not Founds (Negative) Not Found (Negative)

Enforcement of raw milk farm sampling results

Raw milk sample results are kept as part of the farm and plant official record. The record is a
running record that counts the compliance of counts over time.

• One count above the legal standard (with the exception of antibiotic results) does not
result in regulatory action.
• Whenever 2 of the last 4 consecutive quality counts exceed the standard, a written
“Notice of Intent to Suspend” letter will be issued. Within 21 days of the letter, but not
before the lapse of 3 days, an additional sample must be taken.
• Whenever the standard is violated by 3 of the last 5 quality counts immediate
suspension of permit or product will be instituted. Regulatory action will also be taken if
the farm fails to submit counts in at least 4 out of every 6 months.
• Any positive antibiotic test will trigger the adulterated milk enforcement process and be
counted as a violation.

Raw milk at the Plant

• All milk that is used for processing or manufacturing dairy products must be tested
for Animal Drug Residues (Beta Lactams antibiotics) as per the requirements of
Appendix N of the PMO and MN Statute 32D.19.
o Proper certification is required in order to run this test in a processing plant
setting. See the section on PMO Appendix N Testing below.
o Results of these tests are recorded and kept by the plant for review by the
inspector and laboratory evaluation program staff.
• A raw milk sample is also taken by the MDA on a monthly basis at Grade A plants.
This may be from a raw milk tank or commingled milk if milk is being accepted from
multiple farms.

Starting a Small Dairy Processing Plant: The Basics 18

Product Samples

Sampling Frequency
• Grade A product samples are collected monthly. At least one sample of each type of
product that is produced is sampled each month.
• Samples of manufacturing Grade products are collected at an intermittent frequency
which depends upon the type of product that the plant is producing. Higher risk
products are typically sampled more frequently than lower risk products. At start up,
more samples may be taken to ensure there are no pathogens prevalent.

Types of Samples
• Samples are collected of all different types of finished products. For example, any of the
following might be sampled by your MDA inspector:
o Bottled milk products
o Yogurt in its final packaged form
o Cheese that is ready for sale or at a retail outlet
o Packaged ice cream
o Ice cream mix
o Bulk packaged dry milk products
• The different types of samples needed will vary depending upon the type of production
you do.

Sample Analysis:
• Samples are analyzed for different types of food safety hazards or to ensure they meet
specific regulatory requirements.
• Examples of the types of testing that is done include:
o General bacteria levels
o Drug residues
o Coliforms
o Phosphatase
o Pathogens (Salmonella, E. coli, Listeria, Staphylococcus, etc)
• Other non-food safety testing, such as fat or protein levels, may be completed in specific
cases, but are not usually routinely done.

Sample Results:
MDA dairy program personnel will send the results of any sampling done as soon as it is
available. Keep in mind that the results do take time, sometimes up to 2 weeks, so it is
important to conduct your own testing to achieve more timely information on your products.

If the results of sampling indicate that there is a food safety concern, the MDA dairy program
staff will work with you to determine the appropriate response. In some cases, like when a
pathogen such as Salmonella is present, the response may be the recall of the affected product.
Implementing and managing the recall are the plant’s responsibility.

Starting a Small Dairy Processing Plant: The Basics 19

Internal Testing and Quality Assurance
The sampling that is conducted by the Dairy Inspection program is designed to periodically
check to see if your product is meeting regulatory requirements. This testing can be used as a
supplement to your quality assurance program, but is not designed to be your quality assurance
program.
Each plant is responsible for implementing their quality assurance program. This program may
consist of sampling that is used to assess whether the production process is consistently
meeting the desired standards, as well as food safety based testing.
The specific number of samples that are tested, and what they are tested for, will depend upon
many factors, including but not limited to:
• The type of product you produce;
• The plant history; and
• The complexity of your production system.
You may need to collect more samples of your product at during the start-up phase of your
plant in order to develop a good baseline for your process. Each plant’s quality assurance
program will be specific to their unique situation. As you begin your operations, it is very
important to start with a good foundation for quality and safety and development of this
program will help contribute to that foundation.

Starting a Small Dairy Processing Plant: The Basics 20

Section 7: PMO Appendix N Testing &
Adulterated Milk Enforcement
Appendix N Testing
The Appendix N testing is a drug residue testing program adopted by Minnesota from the PMO.
It requires screening of all milk, regardless of final use, for Beta lactam drug residues. This
testing must be performed by a certified laboratory analyst. This may be someone who works
at the plant or someone who works at a separate certified laboratory. Results of these tests
must be documented and shared with the inspector during the inspections.

To get started with setting up an Appendix N testing program, consider the following program
requirements and options:

• You may choose to setup a certified laboratory to conduct this testing. If this is done:
o The plant’s lab area, testing equipment, records and each analyst’s procedures
will need to be evaluated and approved by a state Lab Evaluation Officer (LEO)
for screening of milk before the plant starts production;
o A reevaluation of the laboratory and analyst certification will be conducted every
2 years at the plant; and
o You must participate in yearly split-sample testing where the LEO sends out
known samples for each analyst to test and then compare with the LEO results.
• If you do not want to set up an Appendix N testing laboratory, you may take samples to
an LEO approved lab and have them run the samples.
o If you choose this option, you must have the milk represented by the sample in
your control until the sample confirms negative.
• All Appendix N samples must be run on an FDA approved screening test (FDA M-a-85
Antibiotic Tests Rev #14 page 3).
o Positive results are to be reported to the MDA on the appropriate forms, and the
sample is to be sent to a Confirmation Lab for confirmation.

When you get a positive:

ALL milk at the dairy plant must be tested for beta lactam antibiotics prior to using it in product.
Ideally, this testing should be done before the milk is unloaded in order to avoid contaminating
any other milk in the event that a sample comes back positive.

The initial testing that is done on the milk is a screening testing. When the test shows a positive
result, this initial positive is considered to be a presumptive positive and needs to be confirmed.

Starting a Small Dairy Processing Plant: The Basics 21

Confirmation of that result must be done by a laboratory person who is certified to run
confirmation tests – you may need to perform this test at an outside laboratory if you are not
certified to do the confirmation. For the confirmation test, the milk must be retested in
duplicate using the same test. If any of those tests are positive, then the milk is considered
adulterated (“contaminated”) and discarded.

Reporting Requirement
All confirmed positive results must be reported to the MDA within 24 hours of receiving the
test results. Copies of the forms can be found at the MDA website and may be faxed or
emailed to the MDA.

Enforcement Actions and Penalties

The following penalties will be assessed for adulterated milk violations:

Table 5: Adulterated Milk Violation Actions and Penalties

Violation Number (Within
Actions and Penalty
the past 12 months)

• Completion of the “Milk and Dairy Beef Residue Prevention

Protocol”
1
• A meeting with the inspector to discuss how the residue happened
• Any contaminated milk needs to be discarded

• Completion of the “Milk and Dairy Beef Residue Prevention

Protocol”
2
• A meeting with the inspector to discuss how the residue happened
• Any contaminated milk needs to be discarded

• An administrative meeting with a compliance officer from the

MDA will be held to review the corrective actions that have
3 occurred; the producer’s permit to sell milk may be revoked for 30
days depending upon the nature of the violation and the
producer’s corrective actions.

Starting a Small Dairy Processing Plant: The Basics 22

Appendix A: Getting Started
Questions to Think About as You Get Started
As with most businesses, getting started in processing milk in an on farm or small processing
facility takes a lot of forethought, preparation and time. While it sounds simple and may seem
like it should be easy, it is important to consider all the steps that are involved as well as work
with experts in the field to help you address all the necessary items prior to getting started.
The following list of questions may help you get moving in the right direction:

Step 1 - Initial Questions to Consider

1. What value-added dairy products do you want to produce?
Consider this question carefully. Some products may seem easier to make than others
and may have more value than bottled milk. The best answer to this question is one
where you have looked at your market and understand what products your customers
want. Once you are established, think about how you can expand (cheese, ice cream,
milk, cheese curds, or cottage cheese for example).
2. Will you need to hire additional help?
In the case of an on-farm processing facility, managing both a farm and processing plant
can be overwhelming for just one or two people, just like managing a small processing
plant can be overwhelming for one or two people. Consider some of the following
questions:
• How much time will production require?
• What skills do you have?
• Are there areas where you may not have skills where it would be beneficial to
hire someone to help?
• Will you need to hire separate employees from farm employees to help for the
processing plant?
• Will you need part time or full time help?
3. Have you researched the market?
The success of an on-farm or small processing plant depends on a number of things.
Most importantly, you need someone to buy your product. Before starting, think about
these questions:
• Have you looked at the market carefully and determined the demand for the
product?
• Is it a good time to start producing specialty product?
• Is there a lot of competition in your area?
4. Can you afford it?
A dairy plant is a large investment that will take some time to see a significant return or
profit. It is important to consider ongoing financing as well as the initial financing for
the product.

Starting a Small Dairy Processing Plant: The Basics 23

 5. Who will your customers be?
In order for an operation to be successful, someone needs to buy your product.
Marketing of your product is very important. Consider that selling to just your friends
and family may not be enough to make the operation profitable and other sales
opportunities like local shops, restaurants and grocery stores will need to be identified.
6. What days/how will you sell your product?
Your production volumes and schedule will be determined by when you can sell your
product. Consider the shelf life of your product as well when and how the product will
be sold.
7. Are there other funding opportunities available to help with your project
Grants and low-interest loans are helpful for getting a business off the ground. At times,
grants are made available by the state, or other sources. For more information on these
grants and opportunities check the Minnesota Department of Agriculture website.
8. Do you know the process for producing the products?
It is very important that you learn and know the process for making the products you
are trying to sell in order to ensure you can create a high quality product that consumers
want. Consider the following questions:
• Are there classes you can take to learn the process?
• Will you need to hire an expert?
• Will you know how to run the necessary equipment?

Step 2 - Getting more Information

• Research the product(s) you decided you want to produce
• Visit different processing plants and gather ideas and knowledge for your own
business
• Research the rules and laws that apply to the product as well as facilities
• Research and choose a suitable location

Step 3 – Planning your facility

1. Building the facility (start with essentials and allow for expansion)
• Washable walls, ceilings, floors and surfaces
• Good lighting
• Good ventilation
• Hand washing sinks
• Separate room for clean protective clothing for staff and a changing area
• Good electric supply, as well as a back-up generator
• Water supply, water systems, and water heating systems
• Cold and dry storage area
• Storage warehouse
• Toilet facilities
• Location of doors, windows, and rooms
• Receiving room for unloading bulk milk and storing raw milk
• Separate rooms for washing returnable bottles, crates,

Starting a Small Dairy Processing Plant: The Basics 24

 2. Equipment (manual/automatic) new and / or used dairy equipment can be used in a
dairy plant. However, “buyers beware.” New and used equipment may not meet
current standards for specific processing requirements. If a piece of equipment was
used in an approved dairy processing facility at one time, it does not guarantee the
equipment will be approved for processing today.
• Placement and flow of the product
• Pasteurizer – Vat or High Temperature Short Time (HTST) units
• Separator (to make full-fat, skimmed and semi-skimmed milk)
• Bottling and filler machines
• Vats
• Packaging equipment
• Cleaning equipment - wash vats, brushes, etc.
• recording charts
• Milk and cleaning pumps
• Milk transfer lines or tanks from the milk room to the plant
• Storage tanks
• Etc.

Step 4 – Planning the business side

1. Develop a business plan including:
a. Company Description, what you plan to do, how you plan to do it, what markets
you plan to serve
b. Create a clear mission statement of your goals and a timetable by when to reach
them
c. Market Analysis
d. Structure of your business, who is in charge
e. Product line, what products you plan to produce and how you plan to produce
them
f. Marketing and sales, how you plan to market your products, sales strategy
g. Funding, how you plan to fund your new business
2. Records and Documentation
a. Develop Standard Operating Procedures with clear methods for documenting
processes and procedures performed in the dairy plant
b. Cleaning and sanitation procedures
c. Plans for documenting other regulatory requirements
d. HACCP (Hazard Analysis Critical Control Point) plans or similar food safety plans
e. Recall plans
f. Pest control
g. Allergen control
3. Labeling (brand name, design, required ingredient and nutritional information)
4. Marketing (website, location)
5. Ingredients, equipment (machines)
6. What days/how will you sell the finished product

Starting a Small Dairy Processing Plant: The Basics 25

Step 5 – Plan approval
1. Obtain approval from County Planning and Zoning, and apply for appropriate building,
septic and electrical permits.
2. Submit plumbing plans to the Department of Labor and Industry (DOLI)
a. All licensed plumbers will need to submit these plans to DOLI before proceeding
with any major installations. For more information please see the DOLI Plumbing
Plan Review
3. Plan Review Process:
a. Submission of Plan, Blueprints and Drawings
A copy of all construction plans must be submitted to the MDA Dairy Inspection
Program before construction begins. This should include information on the
following items:
• Basic building layout showing all doors and windows
• Plumbing layout, drain locations, wash vats, and hand sinks with hot & cold
water
• Electrical diagrams and lighting
• Position of the processing equipment, to include tanks, fillers, pasteurizers,
and all other processing equipment
• Diagram of the milk piping layout in the plant to be drawn by the installer
o CIP (Clean-in-place) or manual clean-up?
o Flow of milk - raw and pasteurized
o Valve locations
o Equipment construction, size, material
o Recorder locations
• Toilet facilities are required with proper waste disposal. Toilet room cannot
open into a processing area and must have a hand sink provided.
• Type of materials to be used for flooring, walls, and ceiling.
• Storage facilities - for ingredients, containers, raw product, finished product
• Ventilation plans
• Receiving room – or area for transfer of milk into your facility
• Utility locations of the following items:
o boiler
o water heaters
o furnace
o glycol or sweet water tanks
o compressors
o CIP tanks
o recorders
4. The review process typically takes 30 days and may take longer depending on the back
log of plans. During this time the plan reviewer may call with questions regarding the
plans. Fees are charged for the plan review and plant approval process. The Fee is
$45/hour for all trips the inspector makes except for when they are doing an official
inspection.

Starting a Small Dairy Processing Plant: The Basics 26

 5. A letter will be sent to the applicant as an approval from the MDA to begin construction.
6. Construction should not begin until plans are approved. Failure to wait for approval
may result in having you redo something in the plant if it does not meet regulatory
requirements.

The Next Steps: After Construction Begins

• Periodic consultation and construction inspections will be made by your dairy inspector.
If you are using well water, a water sample will be taken by your inspector after all
plumbing is complete. If the plant uses city water, an initial water sample may be taken
by the inspector. If the on-farm or small dairy processing plant employs more than 25
employees the Minnesota Department of Health would take water samples.

• Approx. 4 weeks before processing plant is to begin operation:

• Label Review: The labels you plan to use on your products will need to be reviewed before you
can use them. More information is available in the section titled: Labeling
• Review of plant documentation: The inspector will review all records and documents you
intend to use and/or have created for your facility. In some cases, there are regulatory
requirements that these documents must meet. This review includes documents such as SOP’s,
pH Logs, Bottle Washer Logs, Sanitizer Logs, CIP charts, Pasteurization charts, PMO Appendix N
documentation and other related documents.
• Single Service Container Source Approval: For Grade A production, a list of container sources
must be made available for review. All suppliers must be on the Interstate Milk Shipper’s listing
of approved sources.

• After Construction- Prior to Production

• When the plant is ready to operate, a full inspection and equipment tests will be
conducted by your dairy inspector.
• Application for operating permit(s) is then submitted to the MDA and the
appropriate fees are paid.
• Monthly Reports to be submitted should be reviewed for any questions. The
following reports must be submitted by a processing plant each month if they are
applicable:
o Processing Fee Reports
o Procurement Fee Reports
• Descriptions of the licenses, certifications, fees and monthly reports that typically
apply can be found in the section titled: Licensing, Certifications and Fees.

Starting a Small Dairy Processing Plant: The Basics 27

Considerations for Planning your Processing Plant

Location
A number of issues should be addressed when choosing a location for a processing plant. A
dairy plant on a dairy farm in close proximity to livestock presents special problems.
1. Accessibility with trucks for delivery of supplies and shipping of product.
2. Prevailing winds, i.e. the processing areas should not be downwind from strong odors,
cattle housing, and feed or manure storage.
3. Proximity to livestock: Visitors to your facility may enjoy seeing your cattle;
unfortunately it is difficult to maintain a sense of absolute cleanliness in a milk
processing plant when animals are just outside the entrance.
4. Insect Control: Insect control alone can be an insurmountable task when cattle and the
manure they produce are close by. Cattle odors and dust created by feeding and
bedding can also be problematic.
5. Drainage: You must have a means of handling wash water from the dairy plant.
Consider different environmental conditions as you evaluate draining. For example,
when there are heavy rains will manure from the cattle housing run down the drive or
area by the plant, is the area prone to flooding?
6. City sewage service: Depending on your location you may need to consider if the public
sewage system can handle the water/milk/chemical wastes that come from a dairy
plant.
7. Private on-site septic systems: If the plant will be using its own private septic system be
sure to check with the regulatory agency (County) to ensure the requirements are met
in regards to the septic system, as well as the ability for the system to handle all the
waste coming from the dairy plant.

Personnel Traffic Into and Through the Processing Plant

• Specifically for on-farm processing plants, livestock workers as well as other farm
employees cannot be allowed to enter the processing plant without showering and a
complete change of clothes. It is necessary to maintain this strict policy in order to
prevent the spread of pathogenic bacteria commonly found on a farm from getting into
the plant. These bacteria (Listeria monocytogenes, Salmonella, Coliforms,
Campylobacter, and others) are serious public health threats and every effort must be
taken to minimize the entrance of such pathogens into a dairy plant.
• In cases where showering is not easily accomplished, people should complete their work
in the processing plant and then move into the less sanitary zoned farm areas. This
reduces the chance that something is moved from the farm into the dairy plant.
• It is strongly recommended that sanitizing foot baths or foamers be provided at each
entrance to the plant as well as between rooms or work areas in processing plants.
• Adequate hair and beard covering and clean clothes and footwear are required for
anyone working or present in the plant.

Starting a Small Dairy Processing Plant: The Basics 28

 • Hands shall be thoroughly washed before commencing plant functions and as often as
may be required to remove soil and contamination. No person shall resume work after
visiting the toilet room without thoroughly washing his hands. Signage of washing hands
is required in all toilet facilities.
• Use of tobacco in the dairy facility is prohibited.
• Persons working in the plant must maintain good clean working habits and conduct
themselves in such a manner as to not contaminate the milk products or equipment

Who can help?

It is important to enlist the help of others as you consider how to build your business. The
following list of experts can help you navigate the process and are essential to helping you
address all areas of your business.
• Marketing experts can recommend strategies for optimum market visibility and
increased sales revenues.
• Food safety and food quality experts can offer advice on how to prevent
contamination, ensure compliance with state and federal regulations, and develop a
quality-control program.
• Extension dairy specialists can help their operations achieve optimal herd health and
milk quality.
• Food scientists can guide in the development of nutritional labels that meet FDA
requirements.

Starting a Small Dairy Processing Plant: The Basics 29

Appendix B: Dairy Inspection Forms
Grade A Dairy Farm Inspection Report: FDA Form 2359a

Starting a Small Dairy Processing Plant: The Basics 30

Grade B Dairy Farm Inspection Report:

Starting a Small Dairy Processing Plant: The Basics 31

Grade A Dairy Plant Inspection Report: FDA Form 2359b

Starting a Small Dairy Processing Plant: The Basics 32

Manufacturing Grade Dairy Plant Inspection Report: FDA Form 2359c

Starting a Small Dairy Processing Plant: The Basics 33

Appendix C: Fees and Licensing
Requirements for Small or On-farm Dairy
Processors
On-farm processors are subject to several fees depending upon their activities and processes, just as
other dairy plants. These include:

• Licensing fees
• Inspection fees
• Farm inspection fees
• Processing fees
• Procurement fees

Licensing Fees
All on-farm cheese or milk processing plants require a license. The type of license required
depends upon a few different factors.

Farmstead Cheese License

- Who needs one? Minnesota farmstead cheese means cheese manufactured within the
state of Minnesota on the same farm on which the milk is produced. This type of license
applies strictly to cheese manufacturers that process only the milk they produce.
- Regulatory Reference: Minnesota Statutes 28A.08 Subdivision 3
- Valid from January 1st to December 31st of the year
- Cost? $30 annually

Dairy Plant Wholesale Food Manufacturing (<700,000 lbs/yr raw milk

processed/yr) License
- Valid from July 1st to June 30th of the year
- Cost? $30 annually
- Who needs one? Any firm processing less than 700,000 pounds of raw milk per year is
eligible for a reduced price wholesale food manufacturing license of $30 (plants
processing more than 700,000 lbs annually are subject to the full price wholesale food
manufacturing license of up to $2571).
- Regulatory Reference: Minnesota Statutes: 28A.08 Subdivision 3

Starting a Small Dairy Processing Plant: The Basics 34

Wholesale Produce Dealers License
- Valid from July 1st to June 30th of the year
- Cost? $75 initially, after the initial fee, there is a sliding scale based on purchases the
prior year.
- Who needs one? Any firm who purchases or contracts with other Minnesota dealers or
farmers for milk and cream and products manufactured from milk and cream, and
brokers who purchase more than $12,000 annually directly from Minnesota farmers. If
the small or on farm processor is purchasing milk from other farmers to process, and the
on-farm or small dairy processing facility does not own the milk, they may be required
to obtain a wholesale produce dealers license.
- Regulatory Reference: Minnesota Statutes: 27.03

Plant and Pasteurizer Inspection Fees

Farmstead Cheese Inspection Fee:
A Minnesota farmstead cheese plant must pay a fee for inspection services provided for the
pasteurization units.

- Billed annually on January 1

- Cost? $140 per HTST,HHST, or VAT unit
- Regulatory Reference: Minnesota Statutes 32D.10 (b)
- Licenses this fee applies to: Farmstead Cheese License

Grade A Plant Inspection Fees:

A processor or marketing organization of milk, milk products, sheep milk, or goat milk who
wishes to market Grade A milk or use the Grade A label must apply for Grade A inspection
service from the commissioner.
- Billed annually July 1
- Cost? $500/ Plant
- Regulatory Reference: Minnesota Statutes: 32D.10 (a)
- Licenses this fee may apply to: Dairy Plant Wholesale Food Manufacturing License

Grade B Plant Pasteurization Unit Fees:

A manufacturing plant that pasteurizes milk or milk by-products must pay an annual fee based
on the number of pasteurization units. A Grade B (Manufacturing Grade) processing plant or
Farmstead Cheese Plant must pay a fee for testing services provided for each pasteurization
unit. This fee is paid for Farmstead Cheese Plants in the Farmstead Cheese Plant Inspection Fee
above.

Starting a Small Dairy Processing Plant: The Basics 35

 - Billed annually January 1
- Cost? $140/HTST,HHST,VAT units
- Statutes: 32D.10 (b)
- Licenses this fee may apply to: Dairy Plant Wholesale Food Manufacturing License

Fees for Approval Services Rendered:

No person shall operate a dairy plant in this state unless the dairy plant, and the equipment,
water supply and plumbing system connected therewith shall have been first approved by the
commissioner and a permit issued to operate. This fee applies to any approval work completed
at the plant or on plant reviews done outside of the normal routine inspections. This may
include plant plan reviews and approval of the dairy plant, equipment, water supply and
plumbing systems. Anytime the inspector is called in to replace a state placed seal on any
processing equipment this fee will apply.
- Billed as service is rendered
- Cost? $45/hour of inspectors time
- Regulatory Reference: Minnesota Statutes: 32D.09 Subdivision 3
- Licenses this fee may apply to: Farmstead Cheese License, Dairy Plant Wholesale Food
Manufacturing License

Farm Inspection Fees

Dairy Plants that procure milk directly from dairy producers or their own farms are billed for
the farm inspections and or reinspections required on the dairy farm.

Grade A Farm Inspection Fees:

A processor or marketing organization of milk, milk products, sheep milk, or goat milk who
wishes to market Grade A milk or use the Grade A label must apply for Grade A inspection
service from the commissioner.
- Billed annually July 1
- Cost? $50/ Farm
- Regulatory Reference: Minnesota Statutes: 32D.06 (b)
- Licenses this fee may apply to: Farmstead Cheese License, Dairy Plant Wholesale Food
Manufacturing License

Grade B Farm Inspection Fees:

A processor or marketing organization of milk, milk products, sheep milk, or goat milk who
wishes to market other than Grade A milk must apply for a manufacturing grade farm
certification inspection from the commissioner.
- Billed annually January 1

Starting a Small Dairy Processing Plant: The Basics 36

 - Cost? $25/Farm
- Regulatory Reference: Minnesota Statutes: 32D.08(b)
- Licenses this fee may apply to: Farmstead Cheese License, Dairy Plant Wholesale Food
Manufacturing License

Grade A Farm Reinspection Fees:

For a farm requiring a reinspection in addition to the required bi-annual inspections, an
additional fee must be paid by the processor or by the marketing organization on behalf of its
patrons.
- Billed monthly on the 15th day of the month
- Cost? <100 cows: $60/farm, >100 cows:$150/farm
- Regulatory Reference: Minnesota Statutes: 32D.06(c)
- Licenses this fee may apply to: Farmstead Cheese License, Dairy Plant Wholesale Food
Manufacturing License

Grade B Farm Reinspection Fees:

For a farm requiring a reinspection in addition to the required annual inspection, an additional
fee must be paid by the processor or by the marketing organization on behalf of its patrons.
- Billed monthly on the 15th day of the month
- Cost? $45/farm
- Regulatory Reference: Minnesota Statutes: 32D.08(c)
- Licenses this fee may apply to: Farmstead Cheese License, Dairy Plant Wholesale Food
Manufacturing License

Processor Assessment Fees

Processor Assessment Fees:
A manufacturer shall pay to the commissioner a fee for fluid milk processed and milk used in
the manufacture of fluid milk products sold for retail sale in Minnesota. This fee is also referred
to as the Selected Fee.
- Billed monthly on the 25th day of the month
- Cost? $0.07/cwt of milk used in the manufacturing of fluid milk products sold for retail
in Minnesota
- This fee applies to the following products (in any size of container):

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 Products
Milk: Skim, Low-fat, Non-fat, Whole, Vitamin D, Homogenized, Flavored
Flavored Dairy Based Drinks
Cream: Heavy, Light, Heavy Whipping, Light Whipping, Fluid Dairy Creamers
Half & Half
Sour Cream
Acidified Sour Cream
Buttermilk
Cultured Milk, Kefir
Cultured Buttermilk
Concentrated Milk & Milk Products
Reconstituted Milk, Half & Half, Skim Milk, Flavored Milk, or Flavored Drink
Acidified Milk
Evaporated Milk
Egg Nog
Yogurt: Low-fat, Non-fat, Full-fat, Flavored
Cottage Cheese, Dry Curd Cottage Cheese
Any size or combinations of the above categories are applicable to the Selected
Dairy Fee.
- Regulatory Reference: Minnesota Statutes: 32D.12
- Licenses this fee may apply to: Dairy Plant Wholesale Food Manufacturing License

Procurement Fees
Milk Procurement Fees:
Each dairy plant operator within the state must pay to the commissioner on or before the 18th
of each month a fee of $.0071 cents per hundredweight of milk purchased the previous month.
- Billed monthly on the 25th day of the month
- Cost? $0.0071/cwt of milk procured by a firm directly from any dairy farm
- Regulatory Reference: Minnesota Statutes: 32D.11
- Licenses this fee may apply to: Farmstead Cheese License, Dairy Plant Wholesale Food
Manufacturing License

Annual Laboratory Evaluation Officer Fees

Annual Laboratory Evaluation Officer Fees:
Before laboratories can conduct tests to be used in the enforcement of the requirements for distribution
of milk, milk products or goat milk under the Grade A label, they must be certified as meeting the
requirements for laboratory approval. An application for initial certification or biennial recertification
shall be accompanied by annual fees based on the number of analysts approved and the number of
specific tests for which they are approved.

Starting a Small Dairy Processing Plant: The Basics 38

 - Billed After evaluation has been performed
- Cost? $200.00/analyst plus $50.00/test approved
- Regulatory Reference: Minnesota Statutes: 32D.17
- Licenses this fee may apply to: Farmstead Cheese License, Dairy Plant Wholesale Food
Manufacturing License

Starting a Small Dairy Processing Plant: The Basics 39

Appendix D: Commonly Asked Questions
The following list of questions is not all-inclusive but provides some answers to questions that the MDA
dairy program staff commonly receive when new or prospective dairy plant owners or manufacturers
begin to work through the process.

I have my own recipe for cheese that I’d like to start manufacturing and selling on a small-scale basis.
May I manufacturer this product in my home on a small scale basis and sell it?
No. All dairy product manufacturing must be done in an approved plant. Approved plants could be at
your home or farm, but must be separate from your home kitchen and must still meet the regulatory
requirements for manufacturing of that particular dairy product. If you are interested in testing your
market to determine if investing in your own plant would be successful, there are other dairy plants or
commercial kitchen locations you can use to co-manufacturer your product and help you get going as an
alternative to investing in your own plant from the start.

I would like to sell my products at the Farmer’s Market. Can I sell these products without inspection
under the “Pickle Bill”?
No. Almost all dairy products are considered to be potentially hazardous and do not meet the
conditions necessary to qualify for the “Pickle Bill” exemption. Also, most dairy products are regulated
by both State and Federal regulations so many of the exceptions and exemptions that exist for other
food products are not available for dairy products. Products that are sold at the Farmer’s Market must
be manufactured in an approved dairy plant.

I would like to sell bottled milk, but find that the Grade A requirements are more than I would like to
commit to meeting. Do the Grade A requirements still apply to my product if I leave the “Grade A”
statement off of my product labels?
Yes. The Grade A requirements apply to a type of product and are not simply a labeling category. These
requirements are more stringent than the requirements for producing non-Grade A products, like
cheese or butter, because Grade A products, like fluid milk, can have significant food safety hazards
associated with them and are also generally highly perishable. Also, Grade A products are regulated
under the Federal requirement, called the Pasteurized Milk Ordinance, which is applied consistently
across the entire United States so that consumers can have strong confidence that these products are
produced safely and are of high quality.

Starting a Small Dairy Processing Plant: The Basics 40